IRS Extends Disclosure Deadline for Certain Captive Insurance Companies

Last month, I blogged on the IRS’ identification of Code Section 831(b) micro captives as “transactions of interest,” which triggered an obligation by taxpayers and material advisors to formally disclose the details of their prior-year insurance transactions to the IRS by January 30, 2017 or otherwise face potential penalties up to $50,000. For a detailed discussion of the disclosure requirements, see blog post linked here.

On December 29, 2016, in response to Congressional concerns, the IRS announced an extension of the January 30th disclosure deadline. The extended deadline is now May 1, 2017. See IRS Notice 2017-08, linked here.

Given the detailed disclosures required by the IRS, including the who/what/where/when/why/how of the microcaptive and its history of operations, as well as the identity of all involved parties and fees paid, the time extension was certainly a welcomed holiday present from the IRS. The extended deadline, however, arrives just two weeks after the April 15th filing season. Tax practitioners must therefore remain diligent in their efforts to prepare the required disclosures, made on Form 8886, to insure that their client’s disclosure obligations are timely met.  Instructions to the Form 8886 are linked here.

If you have any questions about your client’s disclosure obligations, or the obligations that you or your colleagues may have, please do not hesitate to contact me at (214) 749-2464 or email me at adaddino@meadowscollier.com.